Fengro owns 100% of the Bomfim project (“Bomfim”) where the Company has begun producing its first fertilizer product – Direct Application Natural Fertilizer (“DANF”) from a high-grade, at surface phosphate deposit.

The Bomfim project is located in Tocantins state within the Cerrado region of Brazil – the fastest growing agricultural district in the world and home to the largest arable land package. As the demand for agricultural commodities continues to increase globally, much of the world’s future food production is expected to come directly from this region.

The Bomfim project is surrounded by large farms, agricultural centers and co-ops of southern Tocantins, west Bahia and northeast Goiás states. Due to the heavy rainfall associated with the tropical climate, the soil lacks sufficient nutrients for efficient agricultural production. Therefore, farmers must fertilize their soils on an ongoing basis and in some cases bi-annually

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The Company’s project benefits from the existing road infrastructure, water dams, communication network, power lines and a local airport, which is currently under construction. Recently, the Brazilian Government has approved The FIOL (Ferrovia Integração Oeste Leste) – a new railway line that will pass just 100km to the north of the project area.

Production of direct application natural fertilizer (DANF)

In 2014, Fengro received all licenses and permits required to begin DANF production. It secured a production facility and performed all the necessary upgrades to the facility. Fengro’s high-grade deposit is at surface, making the mining operation simple. The excavated ore is transported from the mine site to the nearby processing facility, where it undergoes crushing and screening to arrive at the final product.

TARGET MARKET: Fengro is the only DANF producer in the North East portion of the Cerrado region and greatly benefits from its close proximity to its customers. With attractive competitive prices, the Company intends to target the agricultural market within a 500km radius of the project. .

Currently, approximately 1.2 million tonnes of phosphate rock is being consumed within the targeted 500km radius of the project, yet none of it is being produced domestically.

The imports are coming from places like Algeria, Tunisia and Peru, with high transportation costs being a significant factor in the final pricing of the product. In the case of Tunisia, by the time the product arrives at the farmer’s gate, the costs can be more than double Fengro’s average price of C$100/tonne. The Company intends to use this significant pricing advantage to capture 30% of the 1.2 million tonne phosphate rock local marketplace within the next three years.